Unions sue over retiree health costs (UPDATED)

Public employee unions are suing over the state’s decision to increase the health care contributions for current retirees, claiming two-point increases that took effect October 1 are unconstitutional.

The Retired Public Employees Association filed a similar lawsuit in state court earlier this month. Late Wednesday, the Public Employees Federation, Civil Service Employees Association, United University Professions and other unions representing law enforcement and corrections officers filed suit in federal court, claiming health care for retirees is a form of deferred compensation guaranteed by the contract under which the employees retired.

They argue the state has no right to “unilaterally” alter these benefits because the U.S. Constitution forbids states from “impairing the obligation of contracts.”

“What the Cuomo Administration is trying to do is pull the rug out from under state retirees many of whom planned their retirements based on when they felt they could afford to retire. These decisions were based on a promise and expectation of what their health insurance costs would be. Changing the rules after the fact is outright wrong,” said PEF President Ken Brynien.

The retiree increases came to light after Gov. Andrew Cuomo settled labor contracts with two major state unions, PEF and CSEA. Those agreements brought the employee share from 10 percent to 12 percent for individual and 25 percent to 27 percent for family plans. Those in the higher pay grades, at roughly $40,000 or more, pay even more.

On average, a retiree covered under the Empire Plan would pay about $150 more annually for individual coverage and about $460 more for family coverage, the unions estimated.

The unions are not disputing that the higher rates will apply to future retirees. Because current retirees are not represented by any of the unions and they are not currently on the payroll, it’s unclear what laws or rules, beyond tradition, prevent the governor from raising their share of health insurance costs.

Denyce Duncan Lacey, a spokeswoman for UUP, said its contract explicitly covers retired members. It sent a separate press release announcing a suit.

“The state’s action to unilaterally raise the level of contributions retirees pay for their health insurance is unconstitutional, arbitrary and capricious, and amounts to a breach of our contract,” UUP President Phil Smith said.

In its court papers, PEF argues health insurance contributions are “deferred compensation” and extend according to a provision in the Civil Service Law. The papers note the 10 percent individual contribution level was instituted in the early 1980s, and took effect for employees retiring after Jan. 1, 1983. It did not apply to employees who had already retired, and, “thus, retirement health insurance contribution rates were fixed and vested at the time of retirement and in the contract under which they retired.”

The unions filed separate lawsuits. They collectively represent well over 100,000 current state employees, and each suit named several retired members as plaintiffs and argued for class-action status. The exact number of retired state workers was not immediately known, but the RPEA claims over 40,000 members, roughly 3,000 of whom live in the Capital Region.

The suits name the state itself, Comptroller Tom DiNapoli, Gov. Andrew Cuomo as well as officials in the Department of Civil Service and other administration officials as defendants. Jennifer Givner, a spokeswoman for Attorney General Eric Schneiderman, who defends the state in lawsuits, declined to comment.

Josh Vlasto, a spokesman for Gov. Andrew Cuomo, declined to comment.

Cuomo’s spokesman Josh Vlasto said: “The law clearly allows the administration to apply the terms of a new contract to retirees and it has been well known standard practice to do so.”

UPDATE: All the unions are filing separate suits, to be consolidated later, maybe. Here are the papers filed by PEF and CSEA.